High-tech start-ups in UAE to boom

The number of high-tech businesses launching in the UAE is forecast to double by 2015, encouraged by strong internet use and political stability.

UAE students work as interns at GlobalFoundries in Germany. In addition to large companies such as this, high technology is expected to figure prominently in startups Jeff Topping / The National

The number of high-tech businesses launching in the UAE is forecast to quickly rise through 2015, encouraged by strong internet use and political stability.

About 96 technology-focused start-ups were expected to launch from the Emirates this year, and this was forecast to rise to 185 each year over the next three years, according to a report by Dubai Internet City and the consultancy Frost & Sullivan.

That growth rate is set to outpace that of the broader Middle East and North Africa (Mena) region, where about 520 tech start-ups are expected to launch this year, growing to 880 in 2015.

Jonas Zelba, a research analyst at Frost & Sullivan in Dubai, said he expected the UAE to lead the region in new high-tech businesses. "[The UAE is] an IT-savvy society, funding is there and political stability is there.

It's becoming more and more a popular destination for entrepreneurs, and I think it will thrive in the future."

There are now eight times as many technology-focused start-ups launching annually in the Mena region than in 2005.

Of all the start-ups to emerge in the Middle East during the past six years, 17 per cent were launched in the UAE. Success stories include the classifieds website Dubizzle and the e-commerce portal Souq.com, both founded in Dubai.

The most popular market for high-tech launches during that same period was Jordan, which attracted 32 per cent of the start-ups, followed by Lebanon, which pulled in 20 per cent, according to the report, released yesterday.

Mr Zelba said the UAE was set to take the lead partly because of the ease of doing business here.

"It's easier to do business throughout the GCC starting your company in Dubai, than it is starting your company in Jordan or Lebanon," he said.

The report found that there were 55 venture-capital firms investing in the Mena region, such as Citadel Capital, Swicorp and EFG Hermes.

Many Mena start-upscomplain that it is still too difficult to source funding.

Mr Zelba said that while there was capital available, there were fewer opportunities for smaller companies.

"In Dubai, sometimes it is easier to get a US$1 million [Dh3.67m] investment than to get a $25,000 investment," he said.

Malek Al Malek, the managing director of Dubai Internet City, agreed that it was not always easy for smaller businesses to secure funding. "The majority of the [venture capital] funds - especially the international ones that came from abroad with their own criteria - may not be very suitable to this region," he said.

Abdul Baset Al Janahi, the chief executive of Dubai SME - which helps to develop small and medium-sized businesses as part of the Department of Economic Development- underlined the importance of such enterprises to the economy.

"Ninety-five per cent of the [businesses] in the UAE are small and medium enterprises," he said.

"They contribute around 46 per cent of the GDP, and close to 45 per cent of the workforce. So the opportunity is really, really big."

Mr Al Janahi said more smaller businesses in the UAE were focusing on the technology sector.

"We think there are more and more [information communications technology] companies that will start in this region," he said.

Aside from start-ups, Dubai has also attracted some of the world's largest high-tech businesses.

Both Facebook and LinkedIn launched regional offices at Dubai Internet City this year.

Mr Al Malek added that he wanted "to see Twitter's logo in our community", although he did not give any suggestion that talks with the website were under way.